I have done the math on this, as I wanted to figure out how likely is it Comcast will really pick up FUEL, because switching is a big pain and if they probably will add it, I don't want to do it.
These are some ballpark numbers...
Comcast has around 20% of total cable/satellite/fiber subscribers in US. UFC PPV have wide range of PPV buys but ballpark its been a base of 300k and going back a year or so average closer to 500k-600k. But if you look at the base of the hardcore fans, let's be generous and say its 500k. That means on Comast, there are a total of 100k total hardcore UFC fans out of 20Msomething total subscribers.
All 100k of those fans generate in profit for Comcast annually about 62M (average revenue per subscriber x operating margin for cable), plus Comcast's cut of their PPV buys might be another 30M tops. So around $90M profit for Comcast for all UFC hardcore fans they have.
FOX will want carriage fees for FUEL - Versus looks like its just under 30 cents per subscriber per month. Let's say a new network not much content yet FOX is asking for 1/2 that for FUEL, 15 cents per subscriber on the digital tier. Let's say that 15M of comcast's subscribers in total. That's 15 cents x 12 x 15M = 27M/yr.
That's how much it will cost Comcast to add FUEL. So Comcast isn't going to add FUEL unless they are going to lose more than 27M by NOT adding FUEL.
So, 27M / 90M = 30%
That means if Comcast calculates more than 30% of its hardcore UFC fans will drop Comcast and switch to a new provider, it will add FUEL. If it think less than 30% will, then Comcast will let you all switch and lose your money.
The two big things that will change this is if FOX gets really tough with Comcast about bundling FUEL with its other networks and there is a new carriage agreement where they force FUEL down Comcast's throat, or if UFC gets a LOT more popular in the coming years and Comcast sees a lot more money being lost from UFC fans going to other networks.
So what do you think? Forget the threats, what % of UFC fans consistently buying the PPVs will really switch to fiber or satellite because of this?
